AAI Praises DOJ for Action Against Monopolist Health Care System

The American Antitrust Institute (AAI) praised the Department of Justice (DOJ) today for entering into an agreement that would prohibit United Regional Health Care System of Wichita Falls, Texas, which enjoys monopoly power over most hospital services in its region, from entering into contracts that improperly inhibit commercial health insurers from contracting with United Regional's competitors.

"We applaud the Department of Justice for bringing a case that challenges a monopolist engaging in traditional anticompetitive unilateral conduct," said AAI President Bert Foer. "Monopoly power is pervasive throughout the health sector and contributes significantly to the nation's ever-rising health care costs.  We urge the Justice Department to continue this assault on provider monopoly power."

The proposed settlement prohibits United Regional from continuing to engage in several types of exclusive contracts with insurers -- contracts that would enable United Regional to enshrine its monopoly position, exclude competitors, and preserve its monopoly pricing.  Such prohibited practices include (1) offering access to United services only on an exclusive basis, (2) giving insurers discounts so long as they contract exclusively with United Regional, and (3) requiring insurers to pay penalties to United should they purchase health services from one of United's competitors. United Regional is additionally prohibited from retaliating against any insurer if it contracts with one of its competitors.  The DOJ has made similar demands in a suit against Blue Cross Blue Shield of Michigan, which  is accused of employing similar exclusive contracting arrangements to enshrine its monopoly position in Michigan's insurance market. 

"Exclusive arrangements are employed both by providers and insurers with  monopoly power, stifling sorely-needed competition in the health sector and inflating the prices consumers pay for health care and health insurance,"  said Foer. 

United Regional has market shares of approximately 90 percent for inpatient  services and 65 percent for outpatient services, and it is the region's only provider of many essential medical services.  It enjoys monopoly power in  many health services markets and is "must have" hospital for the area's insurers. As a result, United Regional's average per-day rate for inpatient hospital services is about 70 percent higher than its competitors. 

"Such monopoly power gives United Regional dangerous opportunities to exploit consumers, and there is reason to believe that monopoly power in the  health sector can be even more pernicious than monopoly power elsewhere because health insurance hides costs," Foer said. 

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About the American Antitrust Institute
The American Antitrust Institute is an independent non-profit education, research and advocacy organization. Since its formation in 1998, the AAI's mission has been to increase the role of competition, assure that competition works in the interests of consumers, and challenge abuses of concentrated economic power in the American and world economy.
 
 
MEDIA CONTACT: Bert Foer (202) 276-6002